Enter the total profit earned ($) and the total spent on human capital ($) into the Return on Human Capital Calculator. The calculator will evaluate and display the Return on Human Capital.
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Return on Human Capital Formula
The following formula is used to calculate the Return on Human Capital.
ROHC = P / HC * 100
- Where ROHC is the Return on Human Capital (%)
- P is the total profit earned ($)
- HC is the total spent on human capital ($)
To calculate the return on human capital, divide the profit earned by the total spent on human capital, then multiply by 100.
How to Calculate Return on Human Capital?
The following example problems outline how to calculate Return on Human Capital.
Example Problem #1:
- First, determine the total profit earned ($).
- The total profit earned ($) is given as: 1,000.
- Next, determine the total spent on human capital ($).
- The total spent on human capital ($) is provided as: 400.
- Finally, calculate the Return on Human Capital using the equation above:
ROHC = P / HC * 100
The values given above are inserted into the equation below and the solution is calculated:
ROHC = 1000 / 400 * 100 = 250.00 (%)
FAQ
What is human capital?
Human capital refers to the economic value of a worker’s experience and skills. This includes education, training, intelligence, skills, health, and other things employers value such as loyalty and punctuality.
Why is calculating Return on Human Capital important for businesses?
Calculating Return on Human Capital is important because it helps businesses understand the value they are getting from their investment in their employees. It can inform decisions on training, development, hiring, and compensation strategies to improve productivity and profitability.
Can the Return on Human Capital be negative?
Yes, the Return on Human Capital can be negative if the total profit earned is less than the total spent on human capital. This indicates that the investment in human capital is not generating a positive return, which may prompt a review of human resources strategies.
